What You’ll Learn About Here

  • Why You Should Care if Someone is Legally Your Employee
  • Determining When Someone is an Employee
  • Why the Issue of Employment Status is So Important
  • How Labor Law Apply to Agriculture
  • Steps to Follow When Employing Someone on the Farm
  • Community Supported Agriculture and Subscribers as Workers
  • On-farm Internships and Labor Law Issues

This chapter examines the important issue of how labor laws apply to direct farm marketing.  It examines the application of state and federal labor rules concerning issues such as wages and hours and the application of workers’ compensation law.  The interplay between labor laws and private insurance is also addressed.  Several issues unique to direct farm marketing, such as the possible application of labor laws to on-farm “internships” and how labor laws might apply to CSA members who exchange labor for food, are also addressed.

As a general observation, the question of how labor laws may apply to farming is not one which many people involved in agriculture – farmers and lawyers alike, have given a great deal of attention.  This is true for several reasons.  First, one reason may be the perception that most “labor” laws don’t apply to farming because farmers are self-employed and much of the hired labor is from family members or for short duration.  A second reason may be the perception that existing labor laws generally provide exemptions for agricultural labor.  Third, most people recognize that labor law is a complicated topic people don’t find particularly interesting.   Fourth, even for those who are interested in learning more about how labor laws apply to agriculture, the educational materials available are limited and usually not written with farmers in mind.  Fifth and finally, many people may not want to know more about the issue because they are afraid of what they might find out.

Unfortunately, this chapter can’t promise to make labor laws exciting to read about, although it tries.  But the chapter should give you a better understanding of how labor and employment law issues apply to agriculture and how they might apply to your direct farm marketing operation.  If you have made it this far in the chapter, you already recognize the topic is an important one about which you need to know more.  The starting point for appreciating the importance of labor law is considered in the next section.

Why Should You Care if Someone is Legally Your Employee?

The simple answer is that if someone is your employee you may be legally obligated in a variety of ways, including:  you may be required to provide a number of job related safety and training protections; you may be limited in the hours you can expect employees to work; you may be required to pay certain wages; you may be limited in who you can “hire”; and you may be required to withhold federal taxes, acquire workers’ compensation insurance, and make contributions to your state’s unemployment compensation program.  Finally, if these are not enough, whether a person is legally your employee can determine the standard of care you are required to meet in determining your possible liability if an accident or injury should occur.  One final reason you should know whether someone is your employee is because many other people will have an answer or opinion on the issue, depending on what happens. Other people with an interest in your business may include: state and federal labor officials, the courts, your insurer, and last but not least – the “employee.” Even if you don’t know the answer to the question – or are not interested – you can be guaranteed if a problem arises, other people will have an answer for you.  So it is only common sense that you should know the answer in advance, so you can avoid unpleasant surprises and take necessary steps to comply with applicable labor laws.

Determining When Someone Is an “Employee” of a Farming Business

The answer to the question of “When is someone an employee?” – as with most good questions – is, “It depends.”  The place to begin is by thinking about how and why people visit your farm or have contact with your operation.  By considering the various people who visit your farm with permission, you can begin to determine who might be an employee.

First, there is you.  You generally do not think of yourself as your own employee, instead you are self-employed, or you are the boss or manager.  This is generally the case in labor law, you are considered management.   However, there are reasons why you might want to treat yourself as an employee of your business, for example, paying yourself wages and protecting yourself with insurance in case of accidents.

Second, there are family members – your spouse and children.  These people might be your employees – in fact on most farms, family members provide much of the labor.  But whether they are legally considered employees will depend on the law in question, which might exempt them from coverage, and whether you treat them as employees, for example do you pay your children and take a tax deduction for their wages or do they “work” as part of their family duties?

Third, there are visitors to your farm. This includes your social guests or invitees, other family members who visit, salespeople, and even strangers who knock on the door.  In most situations these people are not your employees because you have not asked them to perform any job. This does not mean you do not owe them a duty – such as not subjecting them to risks, but the issue of liability is discussed in Chapter Ten on insurance. Even in situations where these people might perform tasks – such as helping with the chores – they are generally not considered employees, although this can be an issue if an accident happens. For an example of the problems that can arise when a visiting family member is injured helping with the chores, see the sidebar.

Fourth, other people are on your farm as business invitees, some of them may in fact be engaged in work activities or performing services for you. This group could include customers who have driven to your farm to purchase products.   Most activities in connection with buying or picking up products do not involve any form of employment or labor. However, there are two possible exceptions to this general rule: pick-your-own customers who are harvesting products, and members of your CSA who are performing tasks on the farm.  For both of these groups there might be issues of possible employment or liability.

For the pick-your-own customers, the general legal answer will be – you have not hired them instead they are agreeing to purchase products in a manner which requires them to perform certain tasks. The key is, they have assumed this responsibility voluntarily and are doing it under their own control.  Even though you might benefit from their labor – by not having to hire people to do the picking, this does not make the customers your employees because there was no intention to create such a relationship. If you asked them if they worked for you they would answer no. It is important to recognize that you still owe them a duty of care to prevent harm or accidents – an issue discussed at length in Chapter Ten – but they are not your employees.  As to CSA members, the possible application of labor law – especially in arrangements where work on the farm is expected, such as in exchange for a reduced share price – is more uncertain and is discussed later in this chapter.

Visiting Relative Not an Employee
The legal effect of a court deciding whether a person is farm employee or not is well illustrated in an Iowa case, Ries v. Steffensmeier [570 N.W.2d 111]. The brother of a farm wife was severly injured using a skid loader to shovel manure on the farm. He had visited the farm, while the owners were away and volunteered to help their 16 year-old son do the chores. He sued the owners and won a verdict at the trial court on the theory the owners had been negligent and breached their duty to warn him as an employee about the danger of using the skid loader.

The Iowa Supreme Court reversed the decision and held that before the farmers could be liable there had to be proof of some relationship creating a duty to the plaintiff. But the jury had specifically determined there was no “employment relationship” between the farmers and the injured person which would give rise to such a duty. As a result the farmers were not liable for the injury and the brother-in-law was not an employee.

There are other people who may fit the category of business invitees who visit your farm to perform services.  Examples include repairmen fixing equipment and custom operators, such as the people who apply chemicals for the local cooperative.  While you might have contracted for the services of these people, in most situations they will not be considered your employees.  Instead they are independent contractors you have hired to perform a designated service, using their expertise and equipment.  In all likelihood the people actually doing the work are employees – they just are not your employees, instead they work for the company you hired to provide the service.

Fifth, there are the people who you would consider to be employees – because they probably are.  They are usually non-family members, they are not social guests, they are not customers or business invitees, and they don’t work for someone else.  So why are they on your farm?  Consider the traits these people share:

  • They are on your farm specifically at your invitation;
  • They are there to perform specific tasks you identify, often using your tools and equipment;
  • They are subject to your instructions and under your control;
  • They are doing it in exchange for being paid a wage or other financial return;
  • They believe they are your employees, that is their intent; and
  • You can decide to hire or fire them.

Congratulations, you have just answered the question who is your employee!  What you just did is identify the common law tests courts use to determine whether someone is an employee.  These same tests are in many ways the basis of the labor laws adopted by the states and the federal government.

Why the Issue of Employment Status Is So Important

The main reason it is important to know who is an employee is to determine whether a person is someone to whom the law provides certain protections or benefits and for whom you have certain responsibilities.  If someone is your employee you have a special legal relation with the person.  If someone has the status of being an employee they are entitled to certain protections and benefits which people who are not employees do not have.  These protections and benefits fall into four categories:

1. Worker safety, training and education issues – in most situations, employers are responsible for the safety and welfare of their employees.  This responsibility may include the legal requirement of providing safety equipment, training and education, and insuring a safe work place, such as by meeting the standards of the Occupational Safety and Health Act (OSHA).

2. Wage and hour standards, tax withholding – much of the body of labor law deals with the terms of employment.  Laws with such topics as the minimum wage, the allowable number of hours a person can work, who is eligible to be hired, such as the employment of minors or migrant or seasonal employees, and the withholding of federal and state taxes.  The ability of workers to engage in collective bargaining also fits in this category.

3. Employee financial protections, unemployment and workers’ compensation – state and federal laws provide employees with important financial protections if they are injured on the job or in case they lose their employment and can not find other work.  These protections or benefits are funded by requiring employers to obtain workers’ compensation insurance for “covered” employees and to make payments into the state’s unemployment compensation fund.

4. Liability standards for work related activities – while many labor laws are designed to either minimize the likelihood of on-the-job injuries or to provide compensation when they do occur, one of the most significant issues which can arise in connection with the question of employment concerns the duty of care and the standard of liability between the parties.  A person who is an employee is entitled to a higher standard of care from the employer than are others.

To help you think about how labor law might apply to your farm, the accompanying box lists ten questions to ask yourself on this issue.

Ten Questions to Consider Concerning Employment and Labor Issues
1. Are there people working on your farm who are considered employees under state law?

2. If family members work in the operation are there special labor laws which apply to them?

3. Does the state workers’ compensation law apply to your operation or is there an agricultural employers exception for which you are eligible?

4. If you are required to acquire workers’ compensation insurance is it available through the state or through private insurers?

5. Even if the law does not require you to have workers’ compensation coverage does it still make sense to acquire it voluntarily?

6. If you operate an “intern” program do you need to treat the people participating in it as employees for purposes of such laws as wage and hour requirements?

7. If some of your employees perform both “agricultural” tasks and “non-agricultural” tasks how does this affect their legal status?

8. Does your farm liability insurance policy provide any coverage for workers, such as if an employee would injure a visitor?

9. When your employees are away from the farm premises will your liability insurance still cover their actions?

10.  Are any of your employees engaged in dangerous activities – such as using farm chemicals – which might raise questions about the need for special training or safety equipment?

How State and Federal Labor Laws Typically Apply to Agriculture

To understand how the issues noted above might apply to agriculture, in particular farm direct marketing, it is important to look at the basic rules of labor law and consider how they apply to farming.  To do this, you have to consider how agricultural labor is defined and whether agriculture is generally exempt from the application of labor laws.

Definitions of “agricultural labor”

The labor laws of each state will contain at least one definition of the term “agricultural labor.”  This definition will be important for determining when someone is considered to be an agricultural employee and whether the labor law in question – such as the minimum wage law – applies.  For the most part, the definition of agricultural labor used in the various states will be similar, although the exact definition of which activities or practices are included as “agricultural activities” may vary by state.  The following definition of “agricultural labor” is found in the Iowa law [Iowa Code §96.19(18)(g)(3)] concerning unemployment compensation, and is representative of how the term may be defined in your state:

“agricultural labor” means any service performed:

(a) On a farm in the employ of any person in connection with cultivating the soil, or in connection with raising or harvesting any agricultural or horticultural commodity, including the raising, shearing, feeding, caring for, training, and management of livestock, bees, poultry, and fur-bearing animals and wildlife.

(b) In the employ of the owner or tenant or other operator of a farm, in connection with the operation, management, conservation, improvement, or maintenance of such farm and its tools and equipment, or in salvaging timber and clearing land of brush and debris left by a hurricane, if the major part of the service is performed on a farm.

(c) In connection with the production or harvesting of any commodity defined as an agricultural commodity in §15(g) of the Agricultural Marketing Act, as amended [46Stat.1550,§3,12 U.S.C. 114j], or in connection with ginning of cotton, or in connection with the operation or maintenance of ditches, canals, reservoirs, or waterways, not owned or operated for profit, used exclusively for supplying and storing water for farming purposes.

(d) (i) In the employ of the operator of a farm in handling, planting, drying, packing, packaging, processing, freezing, grading, storing, or delivering to storage or to market or to a carrier for transportation to market, in its unmanufactured state, any agricultural or horticultural commodity, but only if such operator produced more than one half of the commodity with respect to which such service is performed;

(ii) In the employ of a group of operators of farms (or a co-operative organization of which such operators are members) in the performance of service described in (i) of subdivision (d) of this subparagraph, but only if such operators produced more than one half of the commodity with respect to which such service is performed;

(iii) The provisions of (i) and (ii) of subdivision (d) of this subparagraph shall not be deemed to be applicable with respect to service performed in connection with commercial canning or commercial freezing or in connection with any agricultural or horticultural commodity after its delivery to a terminal market for distribution for consumption.

(e) On a farm operated for profit if such service is not in the course of the employer’s trade or business.

The term “farm” is defined in the next section of the Iowa law:

(f) The term “farm” includes livestock, dairy, poultry, fruit, fur-bearing animals, and truck farms, plantations, ranches, nurseries, ranges, greenhouses, or other similar structures used primarily for the raising of agricultural or horticultural commodities, and orchards.

For purposes of direct farm marketing there are a number of important points to recognize from these definitions.  First, they take a broad view of the activities and crops included within agriculture.  Second, they require that at least one half of the products processed or marketed be produced on the farm or farms in question.  Third, the word “farm” is defined broadly to specifically include truck farms, greenhouses, and nurseries.  Fourth, the products and activities covered include horticultural crops such as flowers.  Fifth, employee work performed in processing activities such as canning or freezing is limited by the term “commercial” which may pose problems for marketing value-added products.  Sixth, the limitation placed on activities which happen after products reach “terminal markets” may provide an exception for labor services performed in connection with alternative marketing efforts.

What Steps Should You Follow if You Employ People on Your Farm

If you are going to (or currently do) employ people in your direct farm marketing business there are certain steps you should follow and certain baseline legal requirements you must meet.  The following discussion lists six categories of responsibilities you will have as an employer.

Migrant & Seasonal Farm Workers
One important area of labor law which applies to direct farm marketing concerns the employment of migrant and seasonal farmworkers. Several important laws have been enacted to protect migrant and seasonal farmworkers. These laws provide important protections for the workers concerning the method of determining compensation, timing of payment, field safety conditions and provision of housing. The laws also create rules and procedures with which farmers who are employers must comply. The topic of migrant and seasonal farmworker law is too complex to adequately cover in this Guide. If you are interested in this are of labor law, the best advice is to contract the federal and state law officials for more information.
1. Registering employees and obtaining a federal tax employer number

When you decide to employ someone you should obtain a federal employee number for your use in connection with withholding federal and state taxes from the employee’s paycheck.  This number will be used in connection with keeping records of the employee’s wages and tax withholdings.  This information can be obtained by contacting the state labor officials, addresses for the agencies are contained in the Appendix.

2. Registering as an employer with the state

Most states will require that employers register with the state so that an employer number can be assigned and a recordkeeping system established.  This is especially true in connection with contributions employers may have to make to the state’s unemployment compensation system.

Employers should recognize that in some states, even if farm employees are exempt from the unemployment system, employers are still required to register with the state and must maintain payment records which can be audited and inspected by the state.

3. Complying with the applicable minimum wage and other wage and hour requirements

When you employ people in your farm business, state and federal laws will place requirements on who can be hired (based on their age), the minimum wage they must be paid, and the number of hours you can expect them to work.  Many of the basic protections for employees are contained in the federal Fair Labor Standards Act.  Employers should start with the assumption that the requirements of this law apply to them, unless they can identify a specific exemption applicable to their situation.  Federal labor law provides an exemption for smaller scale agricultural employers, which will be important to many direct farm marketers.  The exemption is discussed in the box below.

Federal Laws Exempt Employers Using Less than 500 Days of Hired Labor
Federal labor law includes several exemptions which may apply to direct farm marketers, The act includes what is known as the small agriculture exemption, [29 U.S.C.

§ 213(a)(6)]. This section exempts from coverage:

(6) any employee employed in agriculture (A) if such employee is employed by an employer who did not, during any calendar quarter during the preceding calendar year, use more than five hundred man-days of agricultural labor, (B) if such employee is the parent, spouse, child, or other member of his employer’s immediate family, (C) if such employee (i) is employed as a hand harvest laborer and is paid on a piece rate basis in an operation which has been, and is customarily and generally recognized as having been, paid on a piece rate basis in the region of employment, (ii) commutes daily from his permanent residence to the farm on which he is so employed, and (iii) has been employed in agriculture less than thirteen weeks during the preceding calendar year, (D) if such employee (other than an employee described in clause (C) of this subsection) (i) is sixteen years of age or under and is employed as a hand harvest laborer, is paid on a piece rate basis in an operation which has been, and is customarily and generally recognized as having been, paid on a piece rate basis in the region of employment, (ii) is employed on the same farm as his parent or person standing in the place of his parent, and (iii) is paid at the same piece rate as employees over age sixteen are paid on the same farm, or (E) if such employee is principally engaged in the range production of livestock

4. Complying with child labor rules applying to agriculture

The same federal law which exempts smaller farm employers also includes provisions related to child labor and agriculture.  The law, [29 U.S.C. §213(c)], provides:

(1) Except as provided in paragraph (2) or (4), the provisions of section 212 of this title relating to child labor shall not apply to any employee employed in agriculture outside school hours for the school district where such employee is living while he is so employed, if such employee

(A) is less than twelve years of age and

(i) is employed by his parent, or by a person standing in the place of his parent, on a farm owned or operated by such parent or person standing in place of his parent,

or (ii) is employed, with the consent of his parent or person standing in the place of his parent, on a farm, none of the employees of which are (because of subsection (a)(6)(A) of this section) [meaning the small farm exemption listed above] required to be paid at the wage rate prescribed by section 206(a)(5) of this title,

(B) is twelve years or thirteen years of age and

(i) such employment is with the consent of his parent or person standing in place of his parent,

or (ii) his parent or such person is employed on the same farm as such employee, or

(C) is fourteen years of age or older.

(2) The provisions of section 212 of this title relating to child labor shall apply to an employee below the age of sixteen employed in agriculture in an occupation that the Secretary of Labor finds and declares to be particularly hazardous for the employment of children, below the age of sixteen, except where such employee is employed by his parent or by a person standing in the place of his parent on a farm owned or operated by such parent or person.

So, what does all this mean?

First, you can hire your own children to do any activity at any age.  However, if they are not your own children, then you can hire children younger than 12 only with the consent of a parent or guardian, and then only if your farm is otherwise exempt, because of its size.  Second, for children (other than your own) who are 12 or 13, you can hire them with the consent of a parent or guardian or if the child is working alongside a parent or guardian, regardless of the size of the farming operation.  Third, if the child is older than 14, no restrictions apply, other than that the employment be limited to outside the hours of normal school time in the district.  However for any child below the age of 16, other than your own, the Department of Labor has rules about hazardous activities, e.g. operating powered machinery that apply.   More information about the federal labor rules for hazardous agriculture activities can be obtained from the extension office or the state labor officials.   Fourth, for children older than 16, no special rules or protections apply.

5. Payments to the State Unemployment Compensation Fund

One of the major obligations which goes with being an employer, is the need to comply with the state unemployment compensation law.  The idea behind these laws, a version of which is found in all fifty states, is that employers make contributions to a state fund, which can then be drawn against by employees of the business who have lost their jobs and are unable to find work.  The amount of the benefits and the length of time a former employee can draw them are issues determined under state law.  From the perspective of the employer the important questions are when do you have to make contributions and what are the procedures to follow when employees are making unemployment claims against you, in particular in those cases where you do not believe the employee is entitled to benefits.

As with many other labor laws, agricultural employers may have an exemption from the need to participate in the state unemployment compensation program.  To learn the exact nature of the exemption and when it applies, you should contact the state labor officials in your state.  In Iowa, the agricultural exemption from unemployment compensation reads as follows:

§96.19 Definitions

As used in this chapter, unless the context clearly requires otherwise:

16.  Employer” means:

l. An employing unit employing agricultural labor after December 13, 1977, if the employing unit:

(1) Paid during any calendar quarter in the calendar year or the preceding calendar year wages of twenty thousand dollars or more for agricultural labor, or

(2) Employed on each of some twenty days during the calendar year or during the preceding calendar year, each day being in a different calendar week, at least ten individuals in employment in agricultural labor for some portion of the day.

Clearly, the most commonly encountered application of this law would be for farm employers who have an annual payroll of more than $20,000 – about one full-time employee.  If employers meet this definition then the law requires them to register and to make quarterly payments into the state unemployment compensation fund, according to a schedule which applies a fixed percent to the salary.  Unlike the case with tax withholding, the law specifically prohibits employers from deducting the amount of the unemployment contributions from the employee’s pay check.

6. Obtaining Workers’ Compensation Insurance Coverage for Agricultural Employees

One of the main labor law questions concerning agricultural operations is the application of state law on workers’ compensation coverage.  The main issue is whether agricultural workers are covered by the programs or whether there is some form of exemption for “agricultural employees” and if so, when does the exemption apply.  This issue is a matter of state law and will vary considerably for each state.  As of 1998 the treatment of agricultural employees under state workers’ compensation laws was as follows, as reported in State Workers’ Compensation Laws, U.S. Department of Labor, Employment Standards Administration, office of Workers’ Compensation Programs:

  • agricultural workers are covered to varying degrees in 37 states.
  • agricultural workers are treated the same as all other employees in the following 12 states, meaning there is no exemption for agricultural employees from workers’ compensation coverage:  Arizona, California, Colorado, Connecticut, Hawaii, Idaho, Massachusetts, Montana, New Hampshire, New Jersey, Ohio, and Oregon.
  • agricultural employers can obtain voluntary coverage for farm employees in the following 13 states, but the laws do not require such protections:  Alabama, Arkansas, Indiana, Kansas, Kentucky, Mississippi, Nebraska, Nevada, New Mexico, North Dakota, Rhode Island, South Carolina, and Tennessee.

As you can see, the coverage of agricultural employees under state workers’ compensation laws varies widely.  That is one reason you should contact the state labor officials if you have questions about this issue.  The addresses and phone numbers for these offices are set out in the Appendix.

If you are in a state which provides only a limited exemption for agricultural employees it is important to know when coverage is required.  As a general rule this will depend on factors such as the size of the payroll of the farm and the number of employees.  In many states the exemption ends once the farm has a payroll of over $2000, which means the exemption is very limited. The following example is the Iowa workers’ compensation law on the issue of coverage for farm employees.  As you can see, what at first looks like an exemption for agriculture turns out to be very limited in application.

Iowa Code §85.1 – To whom applicable

Except as provided in subsection 6 of this section, this chapter does not apply to:

3.  Persons engaged in agriculture, insofar as injuries incurred by employees while engaged in agricultural pursuits or any operations immediately connected therewith whether on or off the premises of the employer, except:

a.  This chapter applies to persons not specifically exempted by paragraph “b” of this subsection if at the time of the injury the person is employed by an employer whose total cash payroll to one or more persons other than those exempted by paragraph “b” of this subsection amounted to two thousand five hundred dollars or more during the preceding calendar year.

[subparagraph b provides exemptions for family members, partners and their family members, officers of a farm corporations and family members, or farm operators who are exchanging labor with other farmers].

The effect of this law means that if a person is employed in agricultural pursuits by someone who has a farm payroll of more than $2500, the workers’ compensation law does apply.  Clearly, it does not require much in the way of hired farm labor to exceed the $2500 limit, meaning in effect that the workers’ compensation does apply to most farm employees in Iowa.  The result may be the same in your state, which is a good reason why you need to check the law.

Q. What is the effect of having the workers’ compensation law apply to farm employees?
The main effect is the law requires you to obtain workers’ compensation insurance coverage for them.  This means you will need to purchase such insurance coverage from a private insurer or participate in a state program.  The price of the insurance will depend on a number of things, including the nature of the work your employees are required to perform (which will be used by the insurer to determine a safety or risk rating) and the competition in the market place by insurers.  Currently, in most states workers’ compensation insurance for farm employees is available from a number of insurers at competitive rates.  However, if you are in a state where private insurers do not offer this type of coverage, you can generally obtain coverage by participating in a public workers’ compensation insurance fund managed by the state.  For more information about the cost and availability of workers’ compensation insurance for your farm contact your insurer or call the state workers’ compensation officials.

Q. What is the value of having workers’ compensation insurance if an employee is injured?
Many farmers and people in the agricultural industry have the opinion that an exemption from workers’ compensation insurance is a benefit to agriculture.  However, there are a number of reasons why this view may be wrong.  The most important protection that employers obtain from participating in workers’ compensation insurance is that if an accident happens, the employee is limited to the workers’ compensation insurance as the sole source of recovery.  This is potentially very important because it means the employee may not bring a common-law tort action in court seeking damages for the injury.  Instead the employee must seek coverage under the terms of the insurance.  In addition, the insurance coverage provides a schedule of benefits or payments for the injuries which occur.  Thus an employee who is injured will generally be paid compensation based on the record of the compensation they have been paid in the past and on the schedule for the type of injury.  This means the employee can not seek unlimited damages or huge punitive damage claims, as they might be able to in a court suit based on a tort theory of recovery, such as for employer  negligence in provided defective tools or unsafe equipment.

In other words, participating in workers’ compensation insurance means employers are protected or limited in their potential liability or the damages they will pay if a worker is injured on the job.  This is the main reason why it makes sense to buy workers’ compensation insurance.  Many employers, even those who may be exempt from coverage decide to obtain workers’ compensation insurance for their operations.  There are other reasons why it makes sense to obtain workers’ compensation coverage for your employees – the most important may be that it is the right thing to do and it is a valuable employee benefit.

Q. What happens if a worker is injured and I do not have workers’ compensation insurance because the law provides an exemption for agriculture?
If an employee is injured on your farm and you do not have workers’ compensation insurance then you are faced with a more difficult situation.  In this case there are two main ways the situation will be covered.  First, your employee might be covered under your farm liability policy, depending on the type of policy you purchased and whether you paid to cover your employees.  But the answer to this question will depend on the interpretation of your insurance policy.  The issue of farm insurance and liability is discussed in Chapter Ten.  To refresh your memory you should keep in mind two points.  First, insurers are not going to be overly generous and offer coverage voluntarily, you will be protected only in those cases where you can show you acquired the coverage.  Second, the typical farm liability policy provides that if employees were required to be covered under a state workers’ compensation law, they will not be covered under your liability policy, even if you think that is what you were acquiring.  This is another very good reason to know what your state law requires as to the coverage of agricultural employees.

The second way your situation will be handled, is the employee may hire a lawyer and bring a civil tort suit against you seeking damages alleging you were responsible for the injury.  The basis of the tort claim will be some theory of liability, such as negligence or providing an unsafe workplace.  The employee will have to show that an employment relationship existed such that you owed the employee a duty of care.  The employee will also have to show that the injury arose from the course of the employment and that the injury occurred due to your breach of the duty owed to the employee, such as by your negligence.  They will also have to show that the breach of the duty was the proximate cause of the injury and the damages experienced.  In most cases the plaintiff – in this case the employee bringing the suit – will have the burden of proof to establish each of these factors.  If the employee can clear these hurdles, the employee can seek all measures of damages, including actual damages, medical expenses, pain and suffering, loss of consortium for the spouse and family, and even punitive damages.  The measure of damages you will pay will be decided by the jury or the judge based on findings of how responsible you were for causing the accident.  Of course in this lawsuit you will be able to bring in any defenses you might have, including such claims as the person was not an employee to whom you owed a duty; assumption of risk; contributory negligence, meaning it was their own fault they got hurt; lack of knowledge on your part of the danger or risk, and even the liability of a third party who actually caused the accident.

These various claims and defenses made by both sides will need to be supported at trial by discovery of documents, re-creation of the accident scene, the testimony of expert witnesses, and other evidence.  This is why civil tort cases can take so long and are so expensive to bring to court.  Of course the parties can settle the dispute at any time if they can agree to a settlement amount.  In most tort situations there may be insurance coverage for the defendant, meaning the lawyers for the insurance company will be the ones making many of the important decisions about whether to settle the case.  But the existence of insurance coverage is not a fact the jury will usually be allowed to hear.

Many of these legal terms and procedures may sound familiar to you, perhaps you have seen them on TV shows about lawyers or read about them in novels.  Even if they may look interesting on TV, you can be sure of one thing, they are sheer terror if you are actually the person being sued.  If you have to be in the courtroom with the economic future of your business and family on the line, potential tort liability is not a laughing matter.  Being sued is nothing to play around with and is not for the faint hearted.  That is one main reason why you need to be aware of when your actions – such as employing people to work for you – may put you at risk of legal liability.

Q. What happens if a worker is injured and I do not have workers’ compensation insurance even though the state law required me to?
This is when you are in big trouble!  This is the worst of both worlds.  First, you do not have insurance coverage to limit your possible losses.  Second, you are now being sued either for a tort in civil court or before the state workers’ compensation board and you are facing no limits on your possible damages.  Third, it gets even worse, because in some states, such as Iowa, the law provides that employers who are required to have workers’ compensation insurance but who do not do so, lose the right to allege any defenses they may have to the employee’s claim.  So in otherwords you are in court with no insurance and no defenses to the employee’s claim of potential liability.  In this worst case senario, you may literally find yourself out of business and the former employee owning your farm.  It is not exactly strict liability but it looks like it from where you are.

The provision of Iowa law on this issue reads as follows:

Section 87.21 Employer failing to insure

Any employer, except an employer with respect to an exempt employee under section 85.1, who has failed to insure the employer’s liability in one of the ways provided in this chapter, unless relieved from carrying such insurance as provided in section 87.11, is liable to an employee for a personal injury in the course of and arising out of the employment, and the employee may enforce liability by an action at law for damages, or may collect compensation as provided in chapters 85, 85A, 85B, and 86.   In actions by the employee for damages under this section, the following rules apply:

1.  It shall be presumed:

a.  That the injury to the employee was the direct result and growing out of the negligence of the employer.

b.  That such negligence was the proximate cause of the injury.

2.  The burden of proof shall rest upon the employer to rebut the presumption of negligence, and the employer shall not be permitted to plead or rely upon any defense of the common law, including the defenses of contributory negligence, assumption of risk and the fellow servant rule,

3. In an action at law for damages the parties have right to trial by jury.

As you can see from this section, the employee is in a much better situation to receive damages in cases where the employer has failed to meet the obligation to provide insurance protection.  The burden shifts to the employer to prove they were not responsible and they lose the right to use most of the defenses which could establish this.  It is easy to understand how employers who might find themselves in this situation might come to a new and different opinion about the value and importance of complying with the workers’ compensation law.  But things can always still get worse.  In many states, including Iowa, it is a crime – in fact a felony for which you can be sent to prison – to not obtain workers’ compensation insurance when it is required.   While this may not be the type of law most county attorneys aggressively enforce, this does not make the risk of jail time any less real.

Community Supported Agriculture and Subscribers as “Workers”

One unique labor law issue relating to direct farm marketing concerns the “work” often provided by the members or subscribers of a CSA.   The issue arises because many CSAs include provisions concerning the ability of members to work in the operation.  By their nature CSAs have a very individualized structure which makes it hard to make general conclusions about how they operate.  However, on the issue of member labor, the arrangements most commonly used can be classified into three types:

  • on-farm work required as part of the membership
  • on-farm work allowed as a method of reducing the membership price, and
  • on-farm work allowed on a voluntary basis primarily for social and recreational purposes.

In those situations where “work” is expected or required of CSA members, the number of hours involved are typically limited to just a few per week or month.  This means that legal issues of minimum wages and reporting typically would not apply.  But the one significant legal issue which could arise relates to the possible liability of the operators of the CSA as “employers” if a member is hurt and is determined to be an employee.  No court cases have addressed this issue, but given the proliferation of CSAs it could just be a matter of time before the question arises.  Before a court could determine that a CSA member was an employee the court would have to consider the tests set out above for determining when an employment relation is created.  In most situations the parties will probably not have conducted themselves so as to create a legal employment relationship.  But this may not always be the case.  Some CSA promotional materials make specific reference to members “working” on the farm.  In addition, if reduced share prices are involved it is clear that compensation is being exchanged for the labor.

The possibility of “employment” issues arising in connection with a CSA can be reduced by not using any form of subscriber work requirement.   If members are allowed to work, it might be wise to make sure the member agreement states clearly that no employment relation is created but instead the member can “visit” the farm voluntarily.  If having members work on the farm is important for the functioning of the CSA then another alternative is to treat the members like employees and list them on the farm insurance policy as covered employees.

It is important to recognize that CSA employment issues can also arise off the farm, such as in situations where members allow the use of their property as a drop-off site in exchange for a reduced share price or where subscribers are “employed” to deliver shares to other people.  Any situation which creates an “employment-like” relation can pose problems especially if an accident happens and someone is injured.  It is good advice to minimize the use of relations which can be interpreted to create employment situations.

The response of some CSA operators to this discussion may be “I don’t worry that one of my members will sue me if they get hurt because they support what I am doing.”    This sentiment may be an accurate reflection of why members love CSA’s but unfortunately it does not reflect how things work if a person is hurt.  It also does not reflect the reality of insurance coverage, where the insurer determines what happens not the insured.  Consider this typical fact situation – a member comes onto the CSA farm and is hurt while hoeing weeds.  The member says “don’t worry I have insurance, it will pay my medical bills.”  When the member requests the insurer to cover the medical costs the insurer may ask “how did you get hurt and where?”  If the member responds “I got hurt while working out on the CSA” the insurer may either deny coverage or request the CSA’s insurance company to provide coverage.  This reveals two facts of life.  First, insurance companies are not charities.  If they think someone else is responsible for coverage they will take that position, regardless of what the policy holder wants.  Second, if someone is injured on your property you may ultimately be responsible even if the other person has insurance.

On-farm Internships and Labor Law Issues

As public interest in buying fresh, locally grown food has increased, there has also been an increase in interest on the part of young people – many of whom were not raised on farms – to learn more about food production.  While agricultural colleges may teach classes on farming few colleges offer hands-on experience raising food crops.  As a result, an increasing number of young people are looking for opportunities to spend time working on farms devoted to raising fresh food for direct marketing to consumers.  At the same time, many farmers involved in raising and marketing fresh produce through direct farm marketing need qualified labor.  One method many of these farmers and “farmers-to-be” are using to satisfy their mutual needs is to create on-farm “internships.”  In the typical on-farm internship, the “student” agrees to work on the farm for a certain period – perhaps 3 months, one growing season, or a year – and the farmer agrees to provide training and experience in the different aspects of planning, planting, caring for, harvesting, processing and marketing food crops.  The actual training may be formal – with the student rotating through a series of experiences – or it may be informal, as in “stay close to me and learn all you can.”   In addition to the agreement for labor in exchange for learning, the intern relation typically involves some payment for the labor and may include room and board while on the farm.

In many ways on-farm internships are as varied as the types of direct farm marketing operations offering them – each depends a great deal on the personalities of the people involved and their motivations.  But on-farm internships can raise some potentially significant legal issues which should be considered, especially if you are thinking about offering an internship.  The most significant issue is the one raised earlier in this chapter – is an intern an employee for legal purposes?  While the relationships vary a great deal, in most situations reviewed for this book, the interns do appear to be employees whether they are called that or not.  In fact, if you asked the parties what they thought they had created most would say it was some form of employment.  The main aspects which are unique to the relations are often the level of compensation and the idea that the main goal is education as opposed to earning wages.

But the issue of whether wages are paid or even the amount of wages paid is not determinative of whether the relationship is one of employment – a question which might arise if an intern is injured or killed while on the job.  Then the question would be why was the person there and what was the relation to the farm?  The fact you don’t think your intern is an employee would not prevent a state labor official or a court from making such a finding – and imposing liability.  For this reason, it is a good idea to assume that interns will be considered by third parties to be employees, and to treat them accordingly for purposes of insurance coverage and other labor law issues.

On the issue of compensation, on-farm internships can vary a great deal.  Information obtained about different intern opportunities indicates they can vary all the way from relations where the “students” are paid a minimum wage for all the hours they work, to weekly stipends of $100 to cover expenses, to situations where the intern actually pays the farmer tuition to live and work on the farm!  While the parties may enter into an agreement that includes a set wage or compensation this would not necessarily protect the employer if the employee later complained they were underpaid according to the law.  As a general rule the more the relation looks like a form of employment then the more likely it is the employee has a valid claim to being paid the minimum wage.  On the other hand, the more the relation includes education and training, the more likely it will be considered something other than just a job.  In either situation, regardless of the wages being paid, the employer should take precautions to make sure the workers are trained concerning safety and the use of equipment and that adequate insurance is obtained to cover the risk of injury.  As a final point, it is important to note that some states may set legal standards for the offering of “internships or apprenticeships” and that some states may set minimum standards for people offering education in exchange for tuition.  If you are contemplating starting an on-farm internship – and plan to charge tuition or to pay less than the minimum wage – you should consider discussing your plans with state labor officials and your insurer.

 

Chapter EightGuide ContentsChapter Ten